Finite difference methods for composite grids were analyzed. It was observed that linear interpolation between grids would suffice only where low order accuracy was required. In the context of fluid flow, this would be in regions where the flow was essentially free stream. Higher order interpolation schemes were also investigated. The well known quadratic and cubic interpolating polynomials would increase the formal accuracy of the overall numerical algorithm. However, it can also be shown that the stability of the algorithm may be adversely affected. Further numerical results are needed in order to assess the nature of this instability induced by the interpolation procedure. Finally, error analysis and the order of difference expressions on general curvilinear coordinates are discussed.